The afternoon of 6 May 2010
would later go down in history
as “the Flash Crash” which saw
trillions of dollars wiped off the
price of stocks only for the market
to rapidly recover in a half-hour
market rollercoaster.

As the morning of 6 May wore on,
negative sentiment began to build
on markets, which saw increasing
volatility and thinning liquidity.
This was the catalyst when a large
mutual fund complex initiated
the sale of $4.1 billion of E-Mini
S&P contracts. Settings for the
algorithm used and the responses
of high-frequency trading firms
meant positions started to be rapidly passed back and forth and the
price of E-minis dropped 3% in just
four minutes.

This led to a cascade effect onother securities and derivativescontracts and leading spirallinglosses in the market. Eventuallyautomated stop systems kicked inand when markets reopened theyrapidly recovered. However, theevent highlighted some of the risksof automated trading algorithmsand has led to increased regula-tion for algo providers and usersand the venues which those algostrade on to prevent a similar eventhappening in the future.

MiFID I

Introduced in 2007 and much narrower in scope than today’s major
European regulation, the Markets
in Financial Instruments Directive
was nonetheless a huge change in
the way trades were conducted
across Europe.

The regulation finally openedup European markets that hadbeen completely dominated by aselection of incumbent national ex-changes and ushered in a new eraof choice and fragmentation. As aresult of new legal structures suchas multilateral trading facilities, ahuge plethora of venues openedup across Europe. While manyfailed, a few have stuck around andbecome major players, includingwhat is today knows as Bats Eu-rope which has become the largestpan-European trading destination.

MiFID also helped to professionalise the industry by putting more
responsibility on traders and introducing the idea of best execution,
which would later be followed up
with more force as part of MiFID II.

Facebook flop

While not the only substantial
failure by a listing venue, the IPO
of Facebook was a fairly gargantuan and high-profile error by listing
exchange Nasdaq, which would
eventually result in tighter regulation for exchanges.

The shares in Facebook, one of
the biggest tech IPOs ever, were
due to start trading at 11am EST on
18 May 2012 but, due to a technical
problem with Nasdaq, this trading
was delayed until 11: 30. This

To celebrate our 50th issue of the magazine, The TRADEteam looks back at the defining moments and influentialpeople which have steered the industry and made it what itis today, for better or worse. We also predict five things tolook out for over the next 50 issues.